I have a young man who comes and does yard work for me -- mows the lawn and trims the hedges in the summer and shovels my walks and drives during the winter. Should I be paying federal or state taxes on the work he does?
Because it is based on tax codes, the answer to your question isn't simple at all. An IRS publication dealing with this subject, "Household Employer's Tax Guide," is available by calling 1-800-829-1040 and requesting publication number 926.
There are two basic factors you must decide:
- Is the person "your" employee, or is he or she working for you on a contract basis?
- Did you pay this person less than $1,100 in 1998? The amount may go up in 1999.
Who is your employee?
- This category includes baby sitters, caretakers, health aides, housekeeper maids, nannies, private nurses and yard workers.
- The worker is your employee is your employee if you control not only what work is done, but how it is done.
- Usually you will provide the tools and equipment your employee uses.
Who is self-employed?
- If the worker controls how the work is done, the worker is not your employee but is self-employed.
- A self-employed worker usually provides his or her tools and offers services to the general public.
How do you pay these taxes?
- If it is your employee, and you paid him or her more than $1,100 in a year, you may need to withhold and pay Social Security and Medicare taxes, or you may need to pay federal unemployment tax, or you may need to do both. You do not need to withhold federal income tax from your household employee's wages. But if your employee asks you to withhold it, you can choose to do so.
What about non-U.S. residents as household employees?
- It is unlawful for you to hire or continue to employ an alien who cannot legally work in the United States.
- When you hire a household employee to work for you on a regular basis, he or she must complete the employee part of the Immigration and Naturalization Service Form 1-9. Copies of this form can be obtained by calling the Immigration and Naturalization Service at 1-800-755-0077.
As I said, it's complicated, and I certainly don't have the tax accounting knowledge to give advice. I do know that with the IRS, ignorance of the law isn't an acceptable excuse. If you hire someone to work in your home regularly and pay him or her more than $1,100, please investigate the tax consequence.
If you have a question or comment for "Sense for Seniors," write to Betty Gibb, Kansas Senior Press Service, 11875 S. Sunset, Suite 200, Olathe 66061.